Modernisation Fund 2024-2030

The Modernisation Fund is financed by revenues from the auctioning of emission allowances under the EU Emission Trading System. With the amendment of the ETS Directive from May 10, 2023, the group of Member States eligible for funding from the Modernization Fund has been expanded to include three additional Member States—Portugal, Greece, and Slovenia—which are since 2024 eligible to obtain funds from the Fund. 

Slovenia is expected to receive over 300 million euros from the Modernization Fund (the final amount of support depends on the price of emission allowances), with the funds available to each eligible Member State being released periodically. For this reason, the process of allocating incentives from the Modernization Fund is carried out in two phases:

• the first phase of the process of incetives allocations: a public call for the selection of project proposals to be included on the indicative list of investments eligible for co-financing from the fund;
• second phase of the process of incentives allocations: call for applications for direct projct approval.

All investments, co-financed by the funds from the Modernisation Fund, have to be consistent with the objectives of the ETS Directive, the objectives set out in the Commission’s communication of December 11, 2019, on the European Green Deal and the climate-neutrality objective of the EU, as well as the long-term goals of the Paris Agreement. Investments must also demonstrate consistency with the objectives, measures, and planned investments in current Comprehensive National Energy and Climate Plan of the Republic of Slovenia.

Priority and non-priority investments

The majority of the resources allocated from the Modernisation Fund (at least 90 percent) must be invested in priority investments. In accordance with the Commission Implementing Regulation (EU) 2020/2001, a priority investment is an investment which falls within at least one of the priority areas listed in Article 10d(2) of the ETS Directive. 

Funds from the Modernization Fund may be used to support investments in the following priority areas:

1. generation and use of electricity from renewable sources, including renewable hydrogen
2. heating and cooling from renewable sources
3. reducing overall energy use through energy efficiency (in industry, transport, building, agriculture and waste sectors), 
4. energy storage and modernising of energy networks, which includes demand-side management, district heating pipelines, grids for electricity transmission, increase in of interconnections among Member States and infrastructure for zero-emission mobility
5. supporting low-income households, including in rural and remote areas, to address energy poverty and to modernise their heating systems
6. supporting a just transition in carbon-dependend regions in the beneficiary Member States, including support to the redeployment, re-skilling and up-skilling of workers, education, job-seeking initiatives and start-ups, all this in dialogue with social partners and civil society, which where appropriate, is consistent with and contributes to the relevant measures included in Member State's regional just transition plans in accordance with Article 8(2), first subparagraph, point (k) of Regulation (EU) 2021/1056.

Up to 10 percent of all Modernization Fund resources allocated to the Republic of Slovenia may be used to co-finance non-priority investments. Non-priority investments are investments which do not fall under any of the priority areas listed above, but are in accordance with Article 10d(1) of the ETS Directive and demonstrate a reduction in greenhouse gas emissions. The investment’s contribution to reducing greenhouse gas emissions is calculated using the European Investment Bank’s methodology.

Investment schemes

Slovenia has two approved investment schemes under the Modernization Fund:

• Scheme RES (part A): Production of electricity form renewable energy sources- solar and with
• Scheme EE (part A): Modernisation and development of the electricity transmission and distribution network

To date, Slovenia has successfully submitted two schemes: one for energy production from renewable sources and one for the modernization of the electricity transmission and distribution grid. Under these schemes, the country has already received nearly 77 million euros, which will be used to support nine projects aimed at upgrading the Slovenian power grid and introducing electricity generation from renewable energy sources.